EXHIBIT 99.1
VASCO REPORTS FOURTH QUARTER AND FULL YEAR 2003 RESULTS - ACHIEVED FOURTH
CONSECUTIVE QUARTER OF PROFIT AND POSITIVE OPERATING CASH FLOW - REPORTED RECORD
NET INCOME FOR FULL YEAR.
Q4 2003 AND FULL-YEAR REVENUES INCREASE 83% AND 32%, RESPECTIVELY, COMPARED TO
PRIOR YEAR; Q4 2003 NET INCOME FROM CONTINUING OPERATIONS OF $0.2 MILLION
COMPARED TO NET LOSSES OF $1.9 MILLION IN Q4 2002; FULL YEAR 2003 NET INCOME
FROM CONTINUING OPERATIONS OF $0.8 MILLION COMPARED TO NET LOSSES OF $5.1
MILLION IN 2002. BACKLOG FOR FIRM ORDERS TO BE SHIPPED IN Q1 2004 AT $5.2
MILLION.
OAKBROOK TERRACE, Ill., and BRUSSELS, Belgium, February 12, 2004 - VASCO Data
Security International, Inc. (Nasdaq: VDSI) ( www.vasco.com), a global provider
of security products that enable e-business and e-commerce, today announced
financial results for the fourth quarter and full year 2003. The results being
reported for 2002 have been restated to report the activities of the VACMAN
Enterprise business unit, which was sold during the third quarter of 2003, as a
discontinued operation.
Revenues for the fourth quarter of 2003 were $6,196,000 and were $2,805,000, or
83% better than the $3,391,000 reported for the fourth quarter of 2002. Revenues
for the full year ended December 31, 2003 were $22,866,000 and were $5,496,000,
or 32% better than the $17,370,000 reported for the full year 2002.
Operating income for the fourth quarter of 2003 was $365,000 and compares to an
operating loss of $2,008,000 for the same period in 2002. Operating income for
the full year ended December 31, 2003 was $1,124,000 and compares to an
operating loss for the full year ended December 31, 2002 of $4,713,000.
Operating expenses for the fourth quarter of 2003 were $3,548,000, a decrease of
$627,000 or 15% from $4,175,000 for the same period in 2002. Operating expenses
for the full year ended December 31, 2003 were $12,732,000, a decrease of
$2,191,000 or 15% from $14,923,000 for the full year ended December 31, 2002.
The Company reported net income from continuing operations of $235,000 and
$761,000 for the quarter and full year ended December 31, 2003, respectively,
compared to net losses from continuing operations of $1,908,000 and $5,108,000
for the quarter and full year ended December 31, 2002, respectively. Net income
from total operations was $265,000 and $2,756,000 for the quarter and full year
ended December 31, 2003, respectively and compares to a net loss from total
operations of $1,899,000 and $4,539,000 for the quarter and full year ended
December 31, 2002, respectively.
Income per basic and diluted common share from total operations was $0.01 for
the fourth quarter 2003 and compares to a loss per basic and diluted common
share of $0.08 for the comparable period in 2002. The Company reported a loss
per basic and diluted common share of $0.06 from total operations for the full
year 2003 compared to a loss per basic and diluted common share of $0.20 for the
full year 2002. The loss per basic and diluted common share for the full year
2003 included a non-cash charge of $3,720,000 or $0.12 per share associated with
the beneficial conversion option included in the Series D 5% Cumulative
Convertible Voting Preferred Stock issued in the third quarter of 2003.
The company revised its third quarter 2003 results to reflect a deemed dividend
under EITF 98-5 relating to the issuance of its Series D Convertible Preferred
Stock during the quarter and will file an amended Form 10-Q as soon as
practicable. The change resulted in a reduction in net income available to
common shareholders of $3,720,000 and a reduction in net income (loss) per
common share. Net income per common share was reduced from $0.04 and $0.06 for
the quarter and nine-months ended September 30, 2003, respectively, to a net
loss of $0.08 and $0.06 per common share, respectively.
Earnings before interest, taxes, depreciation and amortization (EBITDA or
operating cash flow) from continuing operations were $348,000 and $2,299,000 for
the fourth quarter and the full year of 2003, respectively, and compares with a
loss before these items of $1,602,000 and $3,510,000 in the fourth quarter and
full year of 2002, respectively.
The Company had a cash balance at December 31, 2003 of $4,817,000 compared to
$5,524,000 at September 30, 2003 and $2,616,000 and December 31, 2002.
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"The results of the fourth quarter of 2003 reflect the continued focus on
executing our plan," said Ken Hunt, VASCO's Chief Executive Officer. "At this
time last year, we fine tuned VASCO's focus on its core business, worked closely
with our strategic customers to ensure that we could meet their needs in 2003,
reviewed our expense base to ensure that only those activities related to the
core business were carried forward into 2003 and analyzed our balance sheet to
make sure that we were optimizing our cash flow. The results achieved in 2003
demonstrate that the strategy was sound and the plan was executed successfully.
In 2003, we were profitable in each quarter, achieved record profits for the
full year, generated positive operating cash flows in each quarter of the year,
and restructured our balance sheet to eliminate all debt. We are now well
positioned to focus on future growth."
"I am very pleased with the results achieved this year," stated Jan Valcke,
President and COO. "The results reflect the hard work of our staff in looking
for ways to make our processes more efficient and eliminate costs. It also
reflects the broad acceptance of our products in the market place. During the
fourth quarter we added 130 new customers, which brings the total new customers
for 2003 up to 572. As mentioned before, these customers often start off as
pilots and serve as an important source of future revenues as they implement
their strategies fully. We also made significant progress in developing new
products that we believe will serve our existing customers well and provide us
with new opportunities in the future."
Cliff Bown, Executive Vice President and CFO added, "The financial position of
the Company improved substantially in 2003. Cash balances improved $2.2 million,
from $2.6 million at the end of 2002 to $4.8 million at the end of 2003, all of
the Company's term debt was repaid in full and working capital increased
approximately $5.8 million, from a deficit of $0.6 million at December 31, 2002
to a surplus of $5.2 million at the end of 2003. The improvement was a direct
result of the strong operating performance, including the four consecutive
quarters of positive operating cash flow, the reduction in days sales
outstanding in accounts receivable, from approximately 73 days at the end of
2002 to 37 days at the end of 2003, and the equity financing that was completed
in the third quarter."
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VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
( IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED FOR THE YEARS ENDED
DECEMBER 31 DECEMBER 31
-------------------- --------------------
2002 2003 2002 2003
-------- -------- -------- --------
Net revenues $ 3,391 $ 6,196 $ 17,370 $ 22,866
Cost of goods sold 1,224 2,283 7,160 9,010
-------- -------- -------- --------
Gross profit 2,167 3,913 10,210 13,856
Operating costs:
Sales and marketing 1,862 2,398 7,602 6,987
Research and development 651 217 2,525 2,281
General and administrative 1,359 932 4,526 3,423
Non-cash compensation (recovery) (17) 1 (50) 41
Restructuring expenses 320 -- 320 --
-------- -------- -------- --------
Total operating costs 4,175 3,548 14,923 12,732
-------- -------- -------- --------
Operating income (loss) from continuing operations (2,008) 365 (4,713) 1,124
Interest income (expense), net (31) 39 (270) (80)
Other income (expense), net 131 (261) 15 114
-------- -------- -------- --------
Income (loss) from continuing operations before income taxes (1,908) 143 (4,968) 1,158
Provision (benefit) for income taxes -- (92) 140 397
-------- -------- -------- --------
Net income (loss) from continuing operations (1,908) 235 (5,108) 761
Discontinued operations:
Income (loss) from discontinued operations, net of tax 9 191 569 638
Gain on sale of discontinued operations, net of tax -- (161) -- 1,357
-------- -------- -------- --------
Net income (loss) (1,899) 265 (4,539) 2,756
Preferred stock beneficial conversion option -- -- -- (3,720)
Preferred stock accretion/dividends (291) (101) (1,164) (751)
-------- -------- -------- --------
Net income (loss) available to common shareholders $ (2,190) $ 164 $ (5,703) $ (1,715)
======== ======== ======== ========
Basic and diluted net income (loss) per common share:
Income (loss) from continuing operations $ (0.08) $ -- $ (0.22) $ (0.13)
Income (loss) from discontinued operations -- -- 0.02 0.07
-------- -------- -------- --------
Net income (loss) $ (0.08) $ 0.01 $ (0.20) $ (0.06)
======== ======== ======== ========
Weighted average common shares outstanding (in thousands):
Basic 28,262 30,424 28,348 29,270
======== ======== ======== ========
Diluted 28,262 31,315 28,348 29,270
======== ======== ======== ========
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VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
2002 2003
-------- --------
ASSETS
CURRENT ASSETS:
Cash $ 2,616 $ 4,817
Accounts receivable, net of allowance for
doubtful accounts 2,871 2,523
Inventories, net 1,579 1,075
Prepaid expenses 395 476
Other current assets 275 767
-------- --------
Total current assets 7,736 9,658
Property and equipment, net 1,156 882
Intangible assets, net 2,160 1,628
Note receivable and investment in SSI -- 1,132
Other assets 81 83
-------- --------
Total assets $ 11,133 $ 13,383
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 3,590 $ --
Accounts payable 1,850 1,698
Deferred revenue 644 386
Other accrued expenses 2,238 2,355
-------- --------
Total current liabilities 8,322 4,440
Long-term debt, less current maturities -- --
STOCKHOLDERS' EQUITY:
Series C Convertible Preferred Stock 9,108 --
Series D Convertible Preferred Stock -- 5,786
Common stock 28 30
Additional paid-in capital 36,763 47,167
Accumulated deficit (42,608) (43,693)
Accumulated other comprehensive income (loss) -
cumulative translation adjustment (480) (346)
-------- --------
Total stockholders' equity 2,811 8,943
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,133 $ 13,383
======== ========
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Reconciliation of EBITDA from continuing operations to net income from
continuing operations:
UNAUDITED
----------------------------------------------------------
THREE MONTHS ENDED TWELVE MONTHS ENDED
------------- ------------- ------------- -------------
DEC. 31, 2002 DEC. 31, 2003 DEC. 31, 2002 DEC. 31, 2003
------------- ------------- ------------- -------------
EBITDA $(1,602,000) $ 348,000 $(3,510,000) $2,299,000
Interest expense, net 31,000 (39,000) 270,000 80,000
Tax provision -- (92,000) 140,000 397,000
Depreciation and amortization 275,000 244,000 1,188,000 1,061,000
----------- --------- ----------- ----------
Net income (loss) from continuing operations $(1,908,000) $ 235,000 $(5,108,000) $ 761,000
=========== ========= =========== ==========
Highlights of the Quarter:
- - VASCO's Digipass 800 selected by Mastercard and Barclaycard to be part of
the first EMV-project in Europe;
- - VASCO launches Digipass Soft for Sony Ericsson P800;
- - Kasikornbank (Thailand) to offer Digipass 580 to its customers;
- - VASCO presents at AeA Technology Conference;
- - Bank Mandiri (Indonesia) to use VASCO's Digipass 260;
- - VASCO Launches Digipass Pack for Lotus Domino;
- - VASCO Launches VACMAN Middleware 2.1.
Please join us during our upcoming conference call on February 12, 2004, at
10:00 a.m. EDT - 16:00h CET. During the Conference Call, Mr. Ken Hunt, Chairman
& CEO, Mr. Jan Valcke, President and COO, and Mr Cliff Bown, CFO, will discuss
VASCO's Results for the Fourth Quarter and Full Year ended December 31, 2003. To
participate in this Conference Call, please dial one of the following numbers:
USA/Canada: +1 888-424-5801
International: +1 973-409-9258
And mention access code: VASCO to be connected to the Conference Call.
The Conference Call is also available in listen-only mode on www.vasco.com.
Please log on 15 minutes before the start of the Conference Call in order to
download and install any necessary software. The recorded version of the
Conference Call will be available on the VASCO website 24 hours a day.
ABOUT VASCO: VASCO designs, develops, markets and supports patented "Identity
Authentication" products for e-business and e-commerce. VASCO's Identity
Authentication software is delivered via its Digipass security products, small
"calculator" hardware devices carried by an end user, or in a software format on
mobile phones, other portable devices, and PCs. For user access control, VASCO's
VACMAN products guarantee that only designated Digipass users get access to the
application. VASCO's target markets are the applications and their several
hundred million users that utilize fixed passwords as security. VASCO's
time-based system generates a "one-time" password that changes with every use,
and is virtually impossible to hack, or break. With 10 million Digipass products
sold and ordered, VASCO has established itself as a world-leader for strong
Identity Authentication with 250 international financial institutions,
approximately 1400 blue-chip
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corporations, and governments representing more than 60 countries.
Forward Looking Statements
Statements made in this news release that relate to future plans, events or
performances are forward-looking statements. Any statement containing words such
as "believes," "anticipates," "plans," "expects," and similar words, is
forward-looking, and these statements involve risks and uncertainties and are
based on current expectations. Consequently, actual results could differ
materially from the expectations expressed in these forward-looking statements.
Reference is made to the Company's public filings with the US Securities and
Exchange Commission for further information regarding the Company and its
operations.
More information is available at www.vasco.com.
For more information contact:
Media: Jochem Binst: +32 2 456 9810, JBINST@VASCO.COM
Investor Relations: Tony Schor, President, Investor Awareness, Inc.:
847-945-2222, TONYSCHOR@INVESTORAWARENESS.COM
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